Must Have Funds

Sun (Auckland), Volume III, Issue 892, 8 February 1930, Page 9

Must Have Funds

AUSTRALIA USES ECONOMY AXE

All Luxury Schemes Abandoned

GOLD TO MEET OVERSEAS DEBT

AUSTRALIA is wielding the economy axe in public loan . expenditure, and all luxury schemes have been curtailed in an effort to encourage national thrift. A consignment of & 7,000,000 in gold has been dispatched to London to meet the overseas obligations of the Commonwealth. Heavy retrenchments are threatened.

United. P. A. —By Telegraph—Copyright Reed. 10.50 a.m. SYDNEY, Today.

A meeting of the Loan Council at Canberra agreed to further drastic reductions in loan expenditure by the Commonwealth and the States.

. Members will report to their respective Governments, and meet again in a fortnight. The States originally planned to borrow £ 43,000,000. This had already been cut by 30 per cent. Now the economy axe chops it down to about £25,000,000.

All luxury schemes are to be abandoned, and Mr. E. G. Theodore insists that rigid self-imposed discipline will have a tremendously good result in the eyes of overseas investors. The Loan Council endorsed Mr. J. H. Scullin’s assurances that Australia will promptly and regularly meet her obligations.

The New South Wales Treasurer announced today that if the Government was unable to obtain loan money immediately, at least 1,000 men on railway construction development works in the city and country would have to be dismissed at the end of next week. GOLD -SENT TO LONDON

Sir Robert Gibson, chairman of the Commonwealth Bank, announced that the bank is shipping £7,000,000 in gold to London immediately, for the

purpose of building up reserves to meet overseas obligations. This amount, together with £10,000,000 in gold shipped overseas since last July, makes £17,000,000 in gold shipments. Sir Robert pointed out that these shipments in no way impaired the gold reserves held against the note issue, which today stood at 43 per cent. The board of the bank was carefully watching the position, and, if the national needs demanded, further shipments of gold could be provided, and still leave the gold reserve against the note issue unimpaired. The whole movement was directed to meeting accrued or accruing obligations. Sir Robert Gibson emphasised that Australia was sound, and would overcome her present difficulties. Australia’s abnormal prosperity had led to extravagance, but those responsible for the country’s stability were cooperating in this direction, and he had every confidence that the position would right itself. IMPORTS CURTAILED The great disparity on the London, stock market between Australian securities and those of the other Dominions was not justified, and those who had the courage to purchase Australia securities at the market values of today would probably have reason to congratulate themselves later. Meantime it was necessary that imports should be kept down to the minimum until the position was completely adjusted. A message from London says the newspapers give prominence to the statements made by Mr. J. H. Scullin and Mr. E. G. Theodore at Canberra regarding Australia’s financial position. The “Morning Post’s” financial writer states that the reassurances regarding the security of the Australian loan and exchange position caused Australian securities to become distinctly firmer. Both Australian and Indian stocks became as difficult to buy at the quoted prices as they had been difficult to sell previously. EXCHANGE PRECARIOUS Reed. 1. p.m. LONDON, Friday. “The Australian exchange promises to remain precarious until the next export season,” says a newspaper commentator, “failing further borrowing in London.” A New York message says: More gold shipments are almost essential to prevent a drastic depreciation in the Australian pound. it is difficult to foresee a successful issue of an Australian loan ou Loudon, and short-term borrowing is merely to postpone the evil day.